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Wholesale brokers condemn poaching

Two wholesale brokers have challenged their industry by calling for a regulatory body to stop client poaching from smaller brokers.

The two, with a combined multi-million pound turnover, separately contacted Insurance Times last week over the practice by some wholesale brokers of approaching clients "owned" by introducing brokers.

BIBA is currently preparing a similar initiative which would govern the relationship between brokers and underwriters.

One of the two wholesale brokers, Andy Todd, director of Gloucestershire firm ENA, wrote to Insurance Times saying "the time has come to set up a regulatory body to oversee all wholesale brokers working to a commonly agreed code of conduct".

He said he was holding discussions with wholesale brokers who want to see a code of conduct drawn up.

A similar initiative has been started by UK Facilities based in Bolton. The firm this week sent updated agreements to intermediaries highlighting the clause: "UK Facilities undertake not to directly contact the client without the intermediaries' prior consent."

Kevan Stephenson, UK Facilities group's business development manager, called for a clear code of conduct regulating intermediaries' and wholesale brokers' relationships. "It would make the industry more professional," he said.

BIBA chief executive Mike Williams applauded the two brokers. However he urged wholesale brokers to show him the codes first to avoid any confusion

He said BIBA's own code would not be ready until the end of the year because it required a "long, complex and difficult" process of refinement, involving protracted talks with lawyers and covering wholesale brokers' many and varied contractual relationships.

Last week this paper reported on a row between Barmac Insurance of Middlesex and Doncaster-based wholesale broker Preston Whiteside.

Preston cancelled Barmac's facility and on the same day wrote to a Barmac client offering a number of suggestions including dealing with Preston direct.

Todd said the case highlighted a conflict of interest in wholesale brokers which also have a direct broker side.

"Brokers need to be satisfied that a wholesale broker which does not pick up a client will not be tempted to push the business over to its direct broker arm."

A third wholesaler, Citybond Travel Consultants, also condemned client poaching by wholesale brokers with direct arms. "It reeks of malpractice," said sales director Iain Chalmers. "A professional wholesale broker should guarantee not to pass on business to their direct arm if they have one."

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